The company car is still a popular incentive. From 2023 to 2024, the proportion of jobs with a company car-offer by 11.2 percent. In January 2024, the fleet business even experienced record figures for new registrationsopen_in_new. With the company car, companies seem to be increasingly relying on the classic mobility model. In this article, you can find out what advantages company cars offer, what companies should consider when providing them and what the future of the company car could look like.
What is a company car?
A company car, also known as a company car, is a vehicle that is provided to the employee
provided by the company for business purposes.
purposes. The employee can use it to attend business appointments, visit customers, deliver goods or perform other professional tasks. The company car model is used in various areas of the company. Sales employees, managers, but also technicians and field staff often have a vehicle for company use or a company car.
In some cases, employees can also use the company car for private purposes. In this case, it is a valuable incentive that provides a positive stimulus for employees. However, it should be noted that the employee must pay tax on the non-cash benefit arising from this. Companies should define the conditions for the private use of company cars in advance.
In addition to purchasing, company car leasing is also a popular option for procuring company cars.
What are the advantages of a company car?
The company car offers advantages in many respects, both for employees and for companies:
Company car benefits Employees:
- Flexibility: For business trips, a company car makes it possible to get to the next appointment quickly and flexibly. Journeys are not tied to specific times, as is the case when using public transport.
- Save costs: If drivers are also allowed to use the company car privately, this saves the purchase costs for a private vehicle. The employee must pay the non-cash benefit tax only. In some cases, the company also covers the fuel costs.
Company car Employer benefits:
- Employee retention and motivation: A company car can be a valuable incentive. In particular, if employees are also allowed to use the vehicle privately, it can help to increase employee motivation and loyalty.
- Operational mobility: Business trips can be made flexibly with the company car. This makes time management easier and ensures company mobility.
What should companies bear in mind when providing company cars?
Holder liability
Owner liability in the vehicle fleet means that the vehicle
vehicle owner is liable for any damage caused
can be made, regardless of his guilt. Various legal obligations are associated with keeper liability in order to ensure safety in the vehicle fleet.As a rule, the employer or the management transfers these duties to the fleet management. This regulation also applies to company cars or company cars.
Among other things, the fleet manager isobliged to check the driving licenses of all drivers . because only employees with a valid driver’s license are allowed to drive a company car. A six-monthly check-up is recommended, or more often if necessary. You can carry out thedriver’s license check can also be carried out electronically. This saves time and helps you to keep track.
In addition, employees must undergo UVV driver training before using the company car. are trained in the safe handling of the vehicle and how to behave in the event of an accident. You must carry out this instruction once a year. You can also use the Usedriver training as an e-learning course from Fleethouse.
The vehicles must also be regularlyinspected as part of a UVV inspection. be checked for possible defects or damage. This is required by law and regulated in DGUV Regulation . This inspection must be carried out by a competent person in order to ensure a professional assessment.
Insurance
As the person responsible for the fleet, you must ensure that the company cars are comprehensively insured. The costs for the insurance are usually borne by the owner, in this case the company. The following is required by law
at least one motor vehicle liability insurance
. It insures against personal injury and property damage caused to others by drivers of the company car.
In addition, you can voluntarily take out partially or fully comprehensive insurance. Partial cover is liable for damage over which the driver has no influence. This usually includes damage caused by the weather, wildlife accidents or theft. Fully comprehensive insurance offers comprehensive cover in the event of an accident caused by the driver.
Extras such as driver protection insurance may also be relevant for the company car. Which insurance a vehicle needs depends on the individual vehicle type and type of use. It is important to compare different offers in order to choose the right one. Fleet insurance usually offers the most favorable conditions.
Car Policy
In the
Car Policy
defines the conditions under which employees can use a company car. You should also specify criteria such as the equipment and price of the vehicle. Overall, it is about the general handling of company vehicles, which must be observed by all employees. Fleet managers and management have many options when designing these guidelines, as it is a catalog of criteria that is individual to each company.
Claims Settlement
If an accident occurs with the company car, it is particularly important to settle the claim quickly. As the employer is usually the owner of a company car, the company is often liable in the event of an accident.
For private journeys, it depends on what is regulated in the car policy. Accidents should be reported and documented immediately . This facilitates the clarification of liability issues. The rapid provision of replacement vehicles for company cars reduces downtimes and the associated costs.
How is a company car taxed?
If the employee is also allowed to use the company car privately, they must pay tax on the resulting non-cash benefit. There are two different methods for this. The selected method must then be used for the entire calendar year.
Taxation using the 1 percent method
The first option is taxation using the 1 percent method. Private journeys are taxed monthly at a flat rate of 1% of the gross list price of the company car in Germany at the time of initial registration. The list price is the manufacturer’s recommended retail price. It is irrelevant whether the vehicle was purchased or leased and how old it is.
If the employee also uses the company car for journeys between home and work, these must also be taxed at 0.03% of the domestic gross list price per kilometer. However, anyone who drives their company car to work for less than 15 days a month only has to apply 0.002% of the list price.
As not every journey has to be recorded individually, the calculation of the 1 percent method is relatively simple and time-saving. The calculation method is based on the list price of the vehicle. The more expensive the vehicle, the higher the taxable amount. This can lead to tax disadvantages.
The flat-rate taxation with the 1 percent rule offers company car advantages for employees who frequently use the company car for private journeys.
Calculation example:
- Gross monthly income: 3000 euros
- New price of the company car: 35,000 euros
- Distance from home to place of work: 30 kilometers on 20 days per month
- 35000 Euro x 0.01 = 350 Euro
- 35000 Euro x 0.0003 x 30 = 315 Euro
- 350 Euro + 315 Euro = 665 Euro
The non-cash benefit amounts to EUR 665 and is counted as additional income to the salary. This increases the gross income to 3665 euros.
The logbook method
In order to determine the non-cash benefit of the company car more precisely, the employee can keep a logbook. This is particularly useful for employees who only make a few private journeys in their company car. All business and private journeys are recorded in the logbook.
The complete documentation of all journeys is particularly important here. For business trips, employees must document the date, time, mileage, destination and purpose of the trip and the names of the business partners visited before and after each trip. For private journeys, one kilometer is sufficient.
This method is significantly more complex than the 1 percent rule, but can prove to be tax advantageous in the long term. To simplify documentation, the use of an electronic logbook is a good idea.
Special features of electric company cars
Electrically powered company cars benefit from tax advantages. Instead of 1%, only 0.5% of the gross list price has to be taxed as a non-cash benefit. For electric cars that companies buy or lease between December 31, 2018 and January 1, 2031, the following also applies: If the list price is less than €60,000, only 0.25% is taxed.
The future of the company car
The mobility needs of companies and employees are changing. Sustainability and flexibility are becoming increasingly important. At the same time, many new technologies are influencing corporate mobility. In addition to the classic company car, there are new mobility models such as the mobility budget.
Employees receive a fixed budget at their free disposal. With the mobility budget, they can use various mobility services depending on their individual needs. As a rule, local and long-distance public transport services, rental cars and various car, scooter or bike sharing services are available.
These flexible models are becoming increasingly popular. Around one in two who are entitled to a company car would do without it if their employer offered alternatives such as a mobility budget. In addition, the costs for the company are more predictable with this model.
Whether the classic company car or a mobility budget is more efficient depends on the respective situation and must be decided individually. be For many fleets the mobility budget is a good addition to the classic company car model and offers advantages for employees even without a classic company car.
How are company cars managed correctly?
Just like all other vehicles in the fleet, as a fleet manager you also need to manage company cars efficiently to ensure driver safety, comply with regulations and save costs. Fleet managers have to organize different processes and keep track of a wide range of vehicle data.
Fleet software, such as Fleethouse, can help with all these tasks. All vehicle and driver data, contracts, invoices and other documents can be managed centrally. In addition, appointment reminders help to meet deadlines in order to carry out general inspections and driver training on time.
The data also provides the basis for targeted evaluations, thanks to which costs and consumption can be better monitored. This digitizes routine tasks that would otherwise take up a lot of time in day-to-day business.
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The most important facts about company cars
A company car is a vehicle provided by the company for business purposes. In some cases, the employee may also use the company car for private purposes.
Owner liability, insurance cover and claims handling in the vehicle fleet are also relevant for company cars and must be taken into account.
Mobility budgets are an increasingly popular alternative to the classic company car with benefits for employees.
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